Precious Metals Surge As U.S Banking Crisis Spurs Safe-Haven Demand – What’s Next?

Fastest Jump In Interest Rates In 40-years Creates Stress

In fact, the timing couldn’t be more significant. This month marks the one-year anniversary since the Federal Reserve embarked on their most aggressive interest rate hiking campaign in four decades – rapidly raising interest rates from zero to more than 4.5%, since last March.

Historically, every single one of the Federal Reserve’s Quantitative Tightening cycles has ended up breaking something in the financial system.

In 2012–2013, when the Fed announced it would start tapering asset purchases – an episode known as the “Taper Tantrum” – that led to widespread panic selling across the global equity and currency markets with traders piling into safe-havens such as Gold, which was one of the best-performing periods for the precious metal.

Then between 2018–2019, when the Fed began “aggressively” tapering its balance sheet – that led to the “Repo Market Meltdown” – And I’m sure you can guess what happened to precious metal prices during that period.

Surprise, surprise! Here we are once again.

A year after the Fed kicked off its most aggressive interest-rate hiking cycle – they are breaking things again.

More than $55 billion was wiped off the equity markets in less than 24 hours on Friday following the collapse of Silvergate Capital and Silicon Valley Bank – ranked the 16th biggest bank in the United States. Two days, regulators closed New York-based Signature Bank on Sunday – the third largest failure in U.S banking history since the 2008 global financial crisis.

The collapse of 3 prominent U.S banks in the space of 72 hours, reveals stresses created by the fastest jump in interest rates seen in 40-years. The Fed has raised interest rates to tame high inflation, but the consequences act as a critical reminder that when central banks throw their rate hammer around with abandon, things tend to break — if not in the real economy, then in the financial system.

Commodities Love Crisis

Commodities don’t need a crisis to move higher, but they definitely love a crisis. Precious metal prices across the board have been on an absolute tear over the last two sessions – skyrocketing to multi-month highs – And this could just the beginning!

Since the beginning of this year, a long list of leading Wall Street banks from Goldman Sachs, JPMorgan to Bank of America have repeatedly beat the drum that higher prices are coming – predicting “Commodities will be the best-performing asset class in 2023”.

The crisis that is currently unfolding has prompted traders to increase bullish calls for prices to soar further and hit new record highs ahead. That’s welcoming news for the bulls, but painful for anyone sitting on the sidelines, who must now decide how much FOMO they can handle.

Commodity Price Forecast for the Week

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions: